UK Commercial Property REIT (UKCM) has acquired a hotel development opportunity in Leeds for £62.7m from Marrico (Sovereign Square) Ltd, a joint venture between Marrico LLP and Helios.
The group will fund the development of the 305-room hotel, which will be completed by Marrico. The 12-storey hotel is scheduled to complete in 2024 and will have a 25-year franchise agreement in place with Hyatt Hotels, one of the leading global hotel brands with aspirations to grow its presence within the UK.
The hotel will be operated under a lease by Interstate Hotels & Resorts, with UKCM’s rental income based on the income generated from the operation of the hotel. It will be split between the short stay Hyatt Place and the long stay Hyatt House brands, and provide meeting rooms, a gym and several food and beverage options, including a rooftop bar with its own dedicated entrance.
The hotel is located on Sovereign Square in central Leeds, adjacent to the city’s main railway station. UKCM said Leeds was one of the UK’s fastest growing cities and is forecast to grow by 21% over the next 10 years, but has an under-supply of quality hotels.
Will Fulton and Kerri Hunter, fund managers at UKCM, said: “This is the latest acquisition in line with the company’s strategy to enhance earnings by selective investment in assets where the rents are derived solely from their operational performance. By investing in this way in compelling locations with strong market dynamics and teaming up with strong, reputable tenants we are able to obtain a yield that is at a significant premium to that which would be derived from a traditional leasing model.
“Not only will this hotel benefit from a significant supply-demand imbalance of quality accommodation in Leeds and be operated by one of the world’s leading international hotel firms, it is also designed to be future fit with strong ESG credentials and a flexible split between short and long stay brands, as well as external food and beverage options to vary the asset’s offering and maximise its income potential.”
UKCM : UK Commercial Property REIT buys £62.7m hotel development